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Brussels 3rd September, 2003
Updated Non-tariff barriers in the Textile and clothing market for selected countries
Introduction and historical reminder
Euratex strongly believes that to secure additional and true market access, the Doha Development Agenda underlined rightly the need to find agreement on the removal of non-tariff barriers (NTB’s) for non-agricultural products to avoid undermining the benefits from a reciprocal and symetrical tariff duty liberalisation.
Historically, NTB’s have grown in importance after the implementation of the Marrakech Agreement in 1995. Those barriers have mushroomed all over the world and have progressively hampered trade while tariffs (applied and bound) are falling. Euratex has repeatedly stressed this point since 1996 and has conducted several enquiries to identify those NTB’s and has supported all the Commission initiatives in this field.
The Euratex experience shows that once NTB’s appear they tend to last for a long time, as they are very difficult and costly (in time and money) to remove, because there is no transparency in the measures imposed by third countries. In fact NTB’s should be removed rapidly. As time passes the operators attracted by those markets are/will subconsciously include those hidden costs in their market strategy to overcome them and will lose sight of the fact that trade will be much easier without them. Unfortunately, the use of the EU Trade Barrier Regulation, despite some positive results, is far from being satisfactory in dismantling rapidly those barriers that are piling-up in some key growth markets. Is this borne out in reality?
Typology of NTB’s and some ideas to overcome them
The ongoing debate within the WTO showed that there is no accepted definition of what is a non-tariff barrier in terms of WTO language. Euratex is conscious that this absence of a common agreed definition is one of the main stumbling blocks to be overcome one day or another. This explains also why for instance trade defense instruments are considered by other trading partners as being NTB’s while rejecting subsidies, export restrictions, intellectual property rights, access to distribution networks or banking legislation as being part of this overall NTB definition. This is not the belief of the EU
industry. Euratex has made an attempt to classify and define what is a NTB and some important countries[1], when signing specific textile agreements from 2000 onward, have accepted this overall definition. Please find in annex 1 this definition.
Having in mind those elements and despite this absence of common vision, it is accepted that NTB’s can be regrouped in four main families: [a] technical barriers to trade (TBT), [b] custom procedures, [c] the “grey area” barriers compared to actual WTO rules and [d] Sanitary and Phytosanitary Measures (SPS).
While the latter concerns mainly agriculture and agro-industrial products, the grey area barriers will have to be addressed separately to find an agreed solution. This implies that most of the present NTB’s facing the exports of manufacturing products could be classified as TBT or Trade Facilitation area barriers.
The non-tariff barriers dilemma faced by the EC Textile and Clothing industry
Based on the most recent information gathered within the EC industries enclosed in annex 2 and 3 are various tables summarizing the non-tariff barrier problems EU exporters are facing in their day-to-day operations. The countries concerned: Argentina, Australia, Brazil, Canada, Chile, Egypt, India, Indonesia, Japan, Malaysia, Mexico, Pakistan, Philippines, PR China, South Africa, South Korea, Taiwan, Thailand and USA, represent our main EU target as future growth markets for our competitive TC exporters.
Euratex added also Bangladesh, just to show what may or will occur in future with least developed countries unless concrete flanking measures are supported and correctly funded to overcome those problems.
Wherever possible Euratex has completed the picture with more recent information gathered directly from an enquiry-conducted end 2002. In order to be comprehensive and to up-date the table Euratex has completed the enquiry also using the information gathered/checked in the Commission Market Access database[2] and several studies, most of which are known to the Commission services. Those studies are:
“Market assess study to identify trade barriers affecting the EU textiles industry in third country markets” - Final Report – Centre d’Etudes Economiques et Institutionnelles - C.E.E.I. - Brussels – March 1999
“In-depth analysis of trade and investment barriers in certain third country markets in the area of labelling and marking requirements” - Final Report - Centre d’Etudes Economiques et Institutionnelles - C.E.E.I. - Brussels – 16 August 2002
“Identification and analysis of trade barriers in Indonesia, Thailand, Malaysia and the Philippines” - Final Report - PricewaterhouseCoopers - 25 September 2001
“EU-INDIA Joint Initiative for enhancing Trade and Investment - Textiles and Clothing - Working Papers” - Business Forum, Brussels, Sept 26, 2002 – Asia Invest
“2002 Report on US Barriers to Trade and Investment”, DG Trade, EU Commission
The results of the enquiry also allowed Euratex to classify, for those target markets the most common NTB’s its exporters are facing on a daily basis. The tables summarised the intensity of the problems the EC textile and clothing companies find facing them when trying to penetrate fast growing markets.
After a close look to the information gathered, Euratex considers that the situation in the NTB field has not changed significantly since 1999-2000 despite the efforts to solve some of the problems underlined several years ago.
In terms of importance, Trade facilitation issues clearly dominate (custom registration, custom documentation, minimum import prices, import licences, import restrictions), but TBT (standards, quality conformity, sanitary requirements other than SPS, marking and labelling) are still an important feature of the most important consuming textile and clothing Asian markets (i.e. P.R. China, India, South Korea, Japan).
Annexes : 3
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Annex 1
Doha Development Agenda
Proposed declaration on the ban of non-tariff barriers and acceptance of
not re-introducing new ones
In the context of the Single Undertaking concluding the Doha Development Agenda Round and more particularly with reference to paragraph 16 of the Ministerial Declaration in Doha, the Parties recorded their understanding that non-tariff barriers related to all forms of hindrance to trade in the textile and clothing sector, include but are not limited to matters such as:
- Any additional duties on the import or sale of products of origin from one WTO member in excess of the custom duties set out in the Agreement, or any other taxes of equivalent effect, which are higher than any such duties or taxes imposed on the production or sale of equivalent domestic goods.
- Technical regulations or standards, or conformity assessment or certification rules, procedures or practices going beyond the purposes for which they are required.
- Any formal or informal minimum import price requirement, or other customs valuation rules, procedures or practices giving rise to barriers to trade provided that transhipment problems are solved.
- Rules, procedures or practices for pre-shipment inspection that are discriminatory, non-transparent, and excessively lengthy or the imposition of customs controls for the clearance of goods to shipments that have been subject of pre-shipment inspection.
- Excessively burdensome, costly or arbitrary rules, procedures or practices concerning the certification of the origin of products or requiring direct shipment of goods from the country of origin to the country of destination provided that traceability is part of the Trade Facilitation measures.
- Any non-automatic or discretionary licensing requirements, or any automatic licensing rules, procedures or practices imposing disproportionate burdens or having restrictive effects on imports.
- Requirements or practices concerning marking, labelling, the description or composition of the product or the description of the manufacturing of products which, either in their formulation of in their application, are in any form discriminatory as compared with domestic products.
- Unduly long customs clearance delays or excessively burdensome, excessive or costly customs procedures, including inspection requirements, which have an unnecessary restrictive effect on imports.
- Subsidies causing injury to the WTO members industries and not covered by existing WTO rules.
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Annex 2
Non-tariff barriers in textile and Clothing Industry for target countries Revised
Based on number of border measures identified using companies’ enquiries, EC market access database and market access reports.
Argentina / Australia / Brazil / Canada / Chile / Egypt / India / Indonesia / JapanRegistration, documentation of which: / 13 / 9 / 1 / 1 / 4 / 10 / 9
Visas / documents/ Import licence / 4 / 4 / 1 / 2 / 4 / 3
Compulsory Custom & control procedures / 2 / 2 / 1
Custom valuation / Minim. import price / 2 / 3 / 1 / 2 / 1
Clearance delays / 1 / 1 / 1 / 1 / 1
Origin requirement / 3 / 1 / 1 / 2
Classification / 1 / 1 / 1
Import restrictions/quotas / 1 / 1
Duties & charges other than tariffs / 1 / 1 / 1 / 4 / 1
Standard , technical requ. of which: / 5 / 3 / 4 / 1 / 1 / 7 / 6 / 2 / 4
Marking, Labelling / 3 / 1 / 3 / 1 / 1 / 3 / 3 / 1 / 1
Quality conformity / 1 / 1 / 1 / 2 / 1 / 1 / 1
Certification / 1 / 1 / 1
Sanitary requirement / 1 / 1 / 1 / 1 / 1
Subsidies * / 1 / 2 / 1 / 2 / 2
Intellectual property * / 1 / 1 / 1 / 1 / 1
Export restrictions * / 1 / 1
Restriction on terms of payment / 2
Competition/Distribution / 1 / 1 / 1
- Average TC bound duties
Malaysia / Mexico / Pakistan / Philippines / PR China / S. Africa / S. Korea / Taiwan / Thailand / USA
Registration, documentation of which: / 3 / 13 / 7 / 4 / 8 / 4 / 5 / 8 / 3
Visas / documents/ Import licence / 1 / 7 / 2 / 2 / 2 / 3
Compulsory Custom & control procedures / 2 / 2 / 2 / 4 / 2 / 2 / 1
Custom valuation / Minim. import price / 1 / 1 / 1 / 1 / 2 / 2 / 1 / 2 / 1
Clearance delays / 1 / 1 / 1 / 1 / 1
Origin requirement / 2 / 1
Classification / 1 / 1 / 1
Import restrictions/quotas / 1 / 1 / 1 / 1
Duties & charges other than tariffs / 1 / 1 / 1 / 2 / 2 / 2 / 2 / 2 / 1
Standard , technical requ. of which: / 1 / 3 / 1 / 4 / 4 / 3 / 2
Marking, Labelling / 1 / 3 / 1 / 1 / 1 / 2
Quality conformity / 1 / 1 / 1
Certification / 1 / 1 / 1 / 1
Sanitary requirement / 1 / 1
Subsidies * / 2 / 2 / 1 / 2 / 2
Intellectual property * / 1 / 1 / 2 / 1 / 1 / 1 / 2
Export restrictions * / 2 / 1
Restriction on terms of payment / 1 / 1 / 2
Competition/Distribution / 1 / 1 / 1
- Average TC bound duties
Number of border measures identified / 1 / 2 / 3 / 4 to 7 / 8 to 9 / 10 and more
* Barriers or infringements marked with an asterisk would logically be treated within the following WTO Committees or Groups: Committee on trade related aspects of Intellectual property rights, Negotiating Group on Rules. Should this prove not to be the case, solutions need to found to prevent their abuse and proliferation after the Single Undertaking
- source : “WTO unfinished business” – 2001 & Euratex calculation
Updated Non Tariff Barriers list in the Textile and Clothing industry - April 2003page 1 of 17
Non-Tariff barriers in the Textile and clothing market for selected markets29.04.2003
Annex 3
Non-Tariff barriers in the Textile and clothing market for selected markets – April 2003
Euratex consider that the situation has not changed significantly since 2000 despite the efforts to solve some of the problems underpinned several years ago. Where possible Euratex completed the picture with more recent information. TC: Textile and Clothing Euratex decided not to duplicate, where possible, the description of every single NTB as most of them are already known from the Commission services
NTB dismantling priority for Euratex
/Country
/TC specific H horizontal
/ Barriers(t.b.c.: to be confirmed) / Perception of the level of difficulty
HIGH / Argentina / TC / Recent developments: Argentina has long track record of non-tariff barriers textile and clothing. Despite some progress following Euratex Trade barrier Regulation action (1999-2000), the custom clearance system continues to be difficult, cumbersome and imposing long delays. Particularly the very tight and strict control by the customs of all documentation including certificate of origin, declaration form on product composition, labeling. In addition very strict control on custom valuation is still considered to add to the burdensome formalities required for import of the products under examination and to create un unfavourable context to trade.
Recent inquiry confirmed that for EU companies import documentation (i.e. certificate of origin to be legalized by the Embassy) and pre-shipment inspection remain still problematic. Finally the problem of additional import duties, particularly for rugs, is still not resolved even if the measure seems respecting the WTO provisions. / High
HIGH /
Argentina
/ TC / Marking and Labelling: Labelling: according to new legislation the labelling should bear the following information: name of the producer, exporter, importer, country of origin, fibre content, identification of size and care instructions (ISO symbols can be used). The customs are imposing a very strict control of labels during custom clearance. The law leaves open an important place for subjectivity while the same information is requested in 3-4 different documents. Moreover it is requested to affix a fiscal stamp on the labels after custom clearance which is considered excessive, time consuming and costly.New request (2003) In order to ease custom clearance, it is compulsory to have a label with the number of the importer needed (code NIT). This number being released by the Customs. / High
HIGH
/Argentina
/ H / Exchange control procedure which does not allow pre-payment nor payment terms less than 90 days. / HighAustralia / H / Recently (2002-2003) some companies complained of an excessive request concerning [a] the need for fumigation certificate for all goods, which are imported on wooden pallets (boards); [b] the Packing declaration causing problems during custom clearance.
Australia / TC / Labelling is mandatory and in some case products should respect standards (children nightwear, carpets) and should have a care label for products. Generally, EU companies are following the rules and do not really complaint, partially because customs allowed corrections after clearance. In fact the main problems are with the standards that are difficult to meet and therefore the labelling issue became secondary.
Bangladesh / H/TC / Customs and tariff unpredictability: lengthy, burdensome and time-consuming.
Recent enquiries showed the existence of additional import duties following pre-shipment inspections
Bangladesh
/ H/TC / Customs procedures; non-transparent Customs regulations – changes in regulations often issued only partially or after implementation or both.Recently companies complained of problems related to the certificate of origin
Bangladesh / TC / Reference pricing: minimum specific tariffs are often employed against textile and apparel products.
Recent enquiry showed
Bangladesh
/ TC / Licensing, quotas, bans and other restrictions: some fabrics and made-ups are banned using "Balance of Payments" criteria (t.b.c).HIGH / Brazil / H/TC / Despite the August 2002 agreement, exporters are continuously complaining of systematic delays in custom clearance and in official accrediting of custom brokers. Moreover some companies continue to complain about minimum customs value which seems still be applied as well as pre-shipment inspections and in some cases additional import values. In addition import licence is still requested for specific products( i.e. wool fabrics).Finally import quotas seems still be applied to some products (t.b.c.?) / High
HIGH /
Brazil
/ H/TC / All this seems to confirm that Brazil have not given up the system implemented since 1997 which uses a vast array of administrative measures:[a] Customs procedures: Brazil has lengthy and difficult import licensing procedures including non-automatic import license procedures - in 1997, Brazil declared "zero tolerance" policy and instituted new, difficult administrative criteria.
[b] Reference pricing: and valuation problems still remains important .
[c] Internal taxes and charges: Brazil imposes numerous add-on taxes for imports, including union tax, brokerage tax, forwarding agent tax, harbour tax, storage tax also, Customs brokers association tax of $250/container instituted in 1997. / High
HIGH / Brazil / TC / Labelling: according to new legislation the labelling should bear the following information: name of the producer, exporter, importer (with the CUIT number of the importer) country of origin, fibre content, identification of size and care instructions (ISO symbols can be used). This is a potential problem as the tariff and non-tariff barriers are impeding real exports into Brazil.
Recent information (2003) indicate that Brazil have implemented new requirements for textile and clothing products labelling imposing a laboratory test to verify if dry-cleaning washing is really necessary. Potential breach of the bilateral EU-Brazil recent agreement even if the Brazilian claim to fulfil the condition of article 2 of the Technical Barrier to trade (TBT) agreement and confirmed: [a] The type of test method applied; [b] There is no discrimination between domestic and imported products; [c] And most importantly recognised the possibility to certify products in laboratories signatories of various Mutual Recognition agreements. / MEDIUM-HIGH
HIGH /
Brazil
/ TC / Intellectual Property Right: insufficient protection of trade marks and implementation of article 25.2 of the TRIP’s agreementHIGH / Canada / H / Import Licence: validity limited to 30 days (t.b.c.)
HIGH / Canada / TC / Marking and labelling: Marking fibre composition in % and indication on the same label of the name and address of the company, the country of origin and the care labelling instructions. The main problems relies on the delays to obtain the number of the exporter (CA number) . Even if it easy to obtain, come companies complain that this identification number should be placed in the country of origin, which complicates the tasks. / LOW
HIGH / China / TC / NOTE: the following areas have been problems for EU textile exporters prior to China’s entry into the WTO. Nevertheless Euratex consider that the situation has not changed dramatically despite the efforts of China to comply with WTO provisions. Where possible Euratex completed the picture with more recent information
HIGH / China / H/TC / Customs procedures: are considered as being difficult, time-consuming and non-transparent as far as concern import documentation procedures. / High
HIGH / China / TC / Reference pricing: Non-transparent Customs valuation procedures – use of unofficial reference price lists to hike effective tariff rates, which may be used to offset “agreed upon” declines in applied tariff rates; tariffs differ depending on port of entry and importing agents – tariffs often “negotiated” with local Customs agents. / High
HIGH / China / H/TC / Additional duties :
Internal taxes and charges: VAT taxes may be applied in discriminatory manner. / High
HIGH / China / TC / Import licensing procedures: Importing of textile products restricted to foreign trading companies (FTC), Chinese only in origin, licensed by MOFTEC (Chinese trade ministry) and which are nearly always manufacturers and exporters of similar products; in some cases (particularly joint ventures), import is allowed only with a 70 percent re-export clause; distribution channels for textile products controlled by state agencies and dominated by state-controlled enterprises– dual pricing system in effect and importers may receive lower price offers than domestic producers.